The Senate just passed a massive tax bill. Here’s what is in it

During a speech in St. Charles, Mo., on Nov. 29, President Trump said congressional Republicans will pass a tax bill that "will be really, really special." (The Washington Post)

The Senate just approved the largest change to the U.S. tax code in 30 years. Lowering taxes for American businesses and families is the heart of President Trump's plan to boost the economy, although not everyone gets a tax cut in the plan.

“We are going to be saying Merry Christmas again, with a big, beautiful tax cut,” Trump said Wednesday at a speech in Missouri.

The driving force of the Senate GOP tax bill, dubbed the “Tax Cuts and Jobs Act,” is to cut taxes on businesses. Lawmakers on the right and left agree that the United States' 35 percent top tax rate on corporations is too high and not competitive with the rest of the world. The Senate bill would lower that rate to 20 percent, the biggest reduction ever for corporations. The big business cut would be permanent, while the rate reductions for real people are set to expire after 2025.

The Tax Cut and Jobs Act is more than a tax bill. It makes sweeping changes to health care that are expected to lead to 13 million Americans dropping insurance, and it opens up more land to oil drilling in Alaska. It also alters the treatment of state and local taxes, which could affect local government budgets for schools and roads.

Senate Majority Leader Mitch McConnell (R-Ky.) was able to get 51 votes in favor of the bill. The final version was distributed to senators around 7pm on Friday (you can read all 479 pages here), leaving little time for analysis and debate before the vote just before 2am Saturday. No Democrats voted for the bill. Here's a rundown of what is in the bill:

Big win for corporations: The tax rate for big businesses would fall from 35 percent to 20 percent starting in 2019, a large reduction that would put the U.S. corporate tax rate at a lower level than many other foreign nations. On top of that, the bill also allows companies to bring back any money they have stored overseas at a very low tax rate of 14.5 percent. (The House bill's rate for cash repatriations is 14 percent.) Companies would also be able to write off most of their expenses for new buildings and other investments for the next five years. Finally, the bill shifts the tax system on businesses from a worldwide system in which U.S. companies are taxed on all income earned all over the world to a territorial system where businesses are mainly taxed on their earnings in the United States, a change corporations have advocated for many years.

Big win for (most of) the rich: The top tax rate for millionaires would fall under this plan (from 39.6 percent to 38.5 percent). The wealthy also get to keep deducting their contributions to charity, and they benefit from a change that would exempt even more families from paying the estate tax when they pass property and other inheritance to kids and relatives. Many mega rich would also benefit from a last-minute change to the bill to lower taxes even further for so-called "pass through" businesses like LLCs. Overall, Congress's official scorekeepers say over 80 percent of millionaires would pay less in taxes in the coming years under this plan (Note: that analysis was not done on the final version of the plan).

Lower taxes for most Americans — until 2026: The bill keeps seven tax brackets, but it cuts the rates at every level and it raises many of the income thresholds to qualify for the higher bracket. (For example, the new top rate of 38.5 percent would apply only to married couples making over $1 million. The top tax rate currently applies to married couples making over $470,700.) The lower tax rates mean that most Americans — 62 percent — end up getting a tax cut in the coming years, but not everyone does, because the bill also does away with some popular tax credits and savings (see list below).

Elimination of MOST of the state and local tax deduction (SALT): About a third of Americans itemize their tax deductions, and almost all of those people take the state and local tax deduction. The Senate's original plan was to scrap SALT entirely, a big knock to people in high-tax states such as California, New York, Connecticut and New Jersey. But in the end, there was a compromise to allow people to deduct up to $10,000 in property taxes.

Raise the Alternative Minimum Tax threshold (AMT): The Senate was planning to eliminate AMT (as the House bill did), but a last-minute change means the AMT remains in the Senate bill. The threshold where AMT begins to kick in raises only slightly.

A bigger standard deduction and child tax credit, but the personal exemption goes away: At the moment, Americans are able to deduct $4,050 as a “personal exemption” for themselves, their spouse and each dependent. The Senate bill gets rid of the personal exemption entirely. To make up for this, the bill expands the standard deduction so the first $24,000 in income for a married couple ($12,000 for an individual) won't get taxed. The bill also bumps up the child tax credit from $1,000 now to $2,000. The overall effect is that most people are better off, but not all. AARP has come out against the bill, claiming it would raise taxes on over a million seniors by 2019, largely because of the various changes to credits and deductions.

Goodbye to the ability to deduct losses from “fire, storm, shipwreck, or other casualty, or from theft.”

Goodbye to the deduction for tax preparationexpenses. Republicans argue it will be much easier for most Americans to fill out their taxes now.

Goodbye to the deduction for people who bike to work.

Goodbye to the deduction for moving expenses.

Double the teacher expense credit. The Senate bill doubles the amount teachers are able to deduct for buying supplies for their classrooms. The current amount is $250. The Senate plan raises it to $500. (The House plan scraps this credit entirely, one of many differences between the bills.)

The bill would NOT make any changes the student loan deduction or the "tuition waiver" for graduate students would also not change in the Senate bill. (The House bill does strike these provisions, which has caused concern).

The medical expense deduction stays. It even gets MORE generous for 2017, 2018 and 2019.

Many small businesses get a win, but there's a giant exception: Most businesses in the United States are organized as “pass through” companies (sole proprietorships, partnerships, LLCs and S corporations) where the income from the business is “passed through” to the owners and taxed at their individual tax rate. Under this bill, most pass-through businesses wouldn't have to pay tax on 23 percent of their income. The idea is to give mom-and-pop shops a sizable tax break. But there are limitations. Law firms, doctor's offices and other “service businesses” that earn over $250,000 wouldn't be eligible for the deduction. Other really large pass-through businesses would have a limit on how much they can deduct. The idea is to prevent millionaires from getting a really big tax break.

The individual health insurance mandate goes away. Americans would no longer be required to purchase health insurance or else pay a penalty. The Senate plan repeals the “individual mandate.” The Congressional Budget Office, the official nonpartisan estimator, has predicted that this change would cause health insurance premiums to rise by about 10 percent a year and prompt 4 million people to drop insurance by 2019 and 13 million to drop it by 2027.

Drilling would be allowed in Alaska's Arctic National Wildlife Refuge. The latest version of the bill would make it legal for oil and gas companies to drill in a part of Alaska's ANWR area that's along the coast.

People who sell their homes will have a harder time avoiding taxes. At the moment, the first $250,000 gain on the sale of a home is tax-free as long as it's your primary residence and you have lived in the home for two of the past five years. Under the Senate plan, you would have to live in the home for at least five of the past eight years.

Only the richest 1,800 Americans would to pay the estate tax. At the moment, when a person passes away they can leave up to $5.5 million in property and other assets for their kids or other heirs without anyone paying tax. Inheritance above that amount is taxed at a 40 percent rate. The Senate plan would double the exemption limit, so any inheritance up to $11 million for individuals ($22 million for married couples) would not be taxed. Only about 1,800 families a year would be subject to the Senate tax threshold (down from about 5,000 now).

A “Harvard tax” on big college endowments. Private colleges such as Harvard with endowments worth over $500,000 per student would pay a 1.4 percent tax on investment gains every year.